UN group adopts new draft cargo convention
A United Nations Commission on International Trade Law (UNCITRAL) working group meeting in Vienna last week adopted a draft convention on contracts for the international carriage of goods wholly or partly by sea.
The working group has been meeting periodically since April 2002 to prepare a new treaty aimed at creating what UNCITRAL said would be “a modern and uniform law concerning the international carriage of goods which include an international sea leg, but which is not limited to port-to-port carriage of goods.”
UNCITRAL said, “In addition to providing for modern door-to-door container transport, there are many innovative features contained in the draft convention, including provisions allowing for electronic transport records, and other more technical features to fill the perceived gaps in existing transport regimes.
“Harmonization and modernization of the legal regime in this area, which in many countries dates back to the 1920s or earlier, will lead to an overall reduction in transaction costs, increased predictability when problems are encountered, and greater commercial confidence when doing business internationally.”
The proposed convention will be circulated to governments for comment and will be presented to the annual session of UNCITRAL when it meets later this year in New York from June 16 to July 3.
If a final round of negotiations there are successful, it will be presented to the UN’s General Assembly later in 2008, and then have to approved by individual countries.
The proposed convention has higher package liability limits than those provided under the Hague Rules, on which the U.S. law, the Carriage of Goods at Sea Act, is based. Most countries use a different regime called the Hague-Visby rules; a smaller group uses what are called the Hamburg Rules.
The National Industrial Transportation League notes that package limitations are pegged to the International Monetary Fund’s unit of value, Special Drawing Rights.
SDR’s fluctuate like world currencies, and the NIT League said the current COGSA per package limit translates into about $550. Under the proposed draft convention, the per package limit for loss or damage would increase to 875 SDRs. At today’s exchange rate that’s about $1,385. On the basis of weight the proposed limit is 3 SDR per kilogram or about $4.75 at today’s rate.
In its weekly newsletter, the NIT League noted the UNCITRAL agreement was arrived at “only after protracted negotiations between countries that sought to keep limits at the Hague-Visby levels and those who supported higher limits as those provided for in the Hamburg Rules.”
The group said a breakthrough on an agreement was achieved when the limits were tied to the acceptance of the definition of “volume contracts.”
The league noted that most freight today moves under volume contracts and that the new agreement will give parties the right to derogate from the limits of the convention by allowing them to contract to either higher or lower limits for rights, obligations and liabilities, subject to certain conditions.
For example, those conditions would require a prominent statement that the contract derogates from the convention and would require the contract be individually negotiated.
UN group adopts new draft cargo convention
